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NorthWestern Corporation (NYSE:NWE): Has Recent Earnings Growth Beaten Long-Term Trend?

Simply Wall St

After looking at NorthWestern Corporation's (NYSE:NWE) latest earnings announcement (30 September 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.

Check out our latest analysis for NorthWestern

How NWE fared against its long-term earnings performance and its industry

NWE's trailing twelve-month earnings (from 30 September 2019) of US$209m has jumped 17% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 11%, indicating the rate at which NWE is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is merely attributable to industry tailwinds, or if NorthWestern has experienced some company-specific growth.

NYSE:NWE Income Statement, December 6th 2019

In terms of returns from investment, NorthWestern has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. However, its return on assets (ROA) of 5.2% exceeds the US Integrated Utilities industry of 4.4%, indicating NorthWestern has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for NorthWestern’s debt level, has declined over the past 3 years from 5.2% to 4.6%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. While NorthWestern has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research NorthWestern to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for NWE’s future growth? Take a look at our free research report of analyst consensus for NWE’s outlook.
  2. Financial Health: Are NWE’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2019. This may not be consistent with full year annual report figures.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.